CIMA F2 Syllabus C. Group accounts - EPS Introduction - Notes ^{1 / 9}

It is calculated as:

PAT - Preference dividends / Number of shares

It is not only an important measure in its own right but also as a component in the price earnings (P/E) ratio (see below)

Diluted EPS

This is saying that the basic EPS might get worse due to things that are ALREADY in issue such as:

1. Convertible Loan

   This will mean more shares when converted

2. Share options

   This will mean more shares when exercised

Who has to report an EPS?

1. PLCs

2. Group accounts where the parent has shares similarly traded/being issued

EPS to be presented in the income statement.